Rescuers initially feared that hundreds of people could have been buried alive as they slept in their beds in Santa Maria de Tlahuitoltepec.
But officials are speculating that four people may now have been killed, based on a calculation of how many houses were on the slope when the landslide occurred.
Governor Ulises Ruiz said: 'So far no one is confirmed dead, only 11 missing who we hope... will be found.'
Scores of state police and firefighters have been digging with picks, shovels and a bulldozer in a mound of mud and stones that swept down the hillside yesterday morning.
Continued rain forced them to call off the search for eight missing children and three adults due to the threat of more landslides.
The force of the slide dragged houses some 1,300ft down the hill, along with cars, livestock and power lines.
Donato Vargas, an official in the town, said: 'We have been using a backhoe but there is a lot of mud.
'We can't even see the homes, we can't hear the shouts, we can't hear anything.
'We were left without electricity, without telephone and we couldn't help them. There was no way to move the mud.'
President Felipe Calderon reported on his Twitter account yesterday that soldiers had reached the town on foot and that there was a lot of damage, but 'perhaps not of the magnitude initially reported'.
It is the latest in a spate of landslides triggered by heavy rain from Tropical Storm Matthew, which has hit parts of Central America and the north of South America.
Another person has been killed in a mudslide in Villa Hidalgo, in the same Mexican state and 30 were killed on Monday in a landslide in Colombia.
The storm, along with the remnants of Hurricane Karl, have also caused deadly floods in southern Mexico and Honduras.
Fifteen deaths in Mexico have been blamed on flood waters caused by both storms and four people, including a child, drowned in swollen rivers in Honduras.
Colombian President Juan Manuel Santos visited the scene of the landslide which hit his country between the towns of Giraldo and Canasgordas, northwest of Bogota.
Rescue teams have employed sniffer dogs to search tons of earth.
Witnesses described hearing a roar as the first rocks swept over a road and flattened houses.
Heavy rain has also triggered flooding in Colombia which has led to the deaths of 74 people.
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